ICBA Asks OCC To Rescind Coinbase’s Conditional Charter Approval
Seven Takeaways From FDIC Q1 Banking Profile, CFPB & Treasury Undermine CDFI Program, Tennessee Gov. Signs Remittance Tax, Coinbase Re-Launches Direct Deposits
Hey all, Jason here.
It’s that time of year: Money20/20 (Europe) — which makes my life easier, as it’s in Amsterdam. I’ll likely only be on site one of the three days, so, if you see me, please feel free to flag me down to say hi.
Speaking of Europe, two upcoming events that may be of interest to folks that live or do business here:
A Unit21-hosted webinar on June 10th, featuring speakers from MoonPay and BVNK, on the topic “You have your MiCA license. Now what?” — more info and register here.
Also, I’ll be speaking as part of an upcoming RiskTech Connect panel in Amsterdam hosted by SEON, digging into what’s actually happening in fraud and risk right now, what’s working, what isn’t, and where AI is genuinely helping (vs. adding complexity). Full details and registration info here.
AI Customer Support That Holds Up Under 4x Chat Volume
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ICBA Asks OCC To Rescind Coinbase’s Conditional Charter Approval
Earlier this month, the Independent Community Bankers of America (ICBA) sent Comptroller Gould a letter encouraging the Office of the Comptroller of the Currency to rescind Coinbase’s conditional approval to charter a national trust bank.
The move from the trade association, which represents smaller U.S. banks, is one piece of the wider wrangling between “tradfi” (traditional finance) and crypto/stablecoin world.
The stakes — and the rhetoric — appear to be escalating alongside recent developments that could reasonably be described as “wins” for the crypto industry: passage of the GENIUS Act, which created a legal and regulatory framework for stablecoins in the U.S., progress on the crypto market structure bill known as the CLARITY Act, which moved out of the Senate Banking Committee but still faces an uncertain future before the full Senate, and a hodgepodge of developments related to Federal Reserve master accounts.
At the risk of oversimplifying, crypto world is essentially arguing that incumbent banks are working to protect their regulatory moat in order to block competition.
For their part, bank world is basically arguing crypto/stablecoins are pursuing a regulatory arbitrage strategy, in which they functionally engage in the business of banking, but without the requirements and oversight that govern traditional banks. This, bank world argues, poses safety and soundness, financial crime, and consumer protection risks.
The ICBA and the Bank Policy Institute, which represents the country’s largest banks, have filed comment letters opposing many of the national trust bank charter applications filed by crypto- and stablecoin-related firms. The National Community Reinvestment Coalition and Fair Finance Watch, both of which are consumer advocacy groups, also weighed in on a number of the national trust bank applications.
The ICBA’s latest volley against Coinbase’s charter, specifically, asks the OCC to rescind or suspend Coinbase’s conditionally approved trust bank charter. Coinbase received conditional approval of its application on April 2, 2026.
ICBA points to New York Attorney General Letitia James’ suit against Coinbase in the state for what the New York complaint describes as an illegal gambling operation, with the ICBA writing, “[W]e believe that the April 21, 2026 allegations by the New York State Attorney General of violations of state and federal law by a wholly-owned subsidiary of Coinbase Global, merit either the recission of the approval or the suspension of the preliminary approval until the allegations are resolved and the OCC has reevaluated the propriety of granting Coinbase Global a bank charter.”
The subsidiary the ICBA’s letter is referring to is Coinbase Financial Markets, Inc., which the New York Attorney General says “offer[s] users the ability to bet on events, including sports, entertainment, and elections, in violation of New York laws” via so-called prediction markets. This constitutes “illegal, unlicensed gambling operations,” the complaint alleges.
ICBA’s letter points out that the OCC typically would delay or deny an application when a criminal allegation is made against an applicant or a subsidiary, or that, if an application is not withdrawn or denied, that the OCC would normally “impose an enhanced compliance regime to ensure that the bank is not used for unlawful purposes.”
The OCC manual requires it to examine the background of applicants for any information that raises concerns about competence, character, or integrity; Coinbase’s “use of a wholly-owned subsidiary to engage in illegal activities raises the same concerns regarding the integrity, competence and experience of the applicant as if the illegal conduct was conducted directly by the applicant,” the ICBA argues.
ICBA’s letter attaches its original opposition to Coinbase’s national trust bank charter application and reiterates a number of enforcement actions Coinbase has faced in the past:
A January 2023, consent order from the New York State Department of Financial Services for “wide-ranging and long-standing” BSA/AML compliance failures.
A July 2025, consent order from the Connecticut Department of Banking against Coinbase Custody Trust Company, LLC for unlicensed money transmission.
A £3.5 million penalty from the UK Financial Conduct Authority in 2024 for AML failures
A $6.5 million order from the Commodity Futures Trading Commission in 2021 for false reporting and wash trading.
In addition to the regulatory actions against Coinbase, ICBA’s original comment letter in opposition to the company’s charter application, sent to the OCC last November, flags a number of other concerns, including that the proposed entity, Coinbase National Trust Company:
intends to rely on what ICBA describes as Coinbase’s “demonstrably flawed risk and control functions” and “a governance structure that prevents independent oversight”;
would have a narrow concentration in specific types of digital asset custody, posing a challenge for the trust bank to achieve and maintain profitability during crypto bear markets;
would be a challenge for the OCC to resolve should it fail, given that the OCC’s receivership framework for uninsured institutions of CNTC’s scale is untested.
Bank lobbyists and consumer advocates aren’t the only ones with concerns about Coinbase’s and other firms trust charter applications.
Senator Elizabeth Warren (D-MA), the ranking Democrat on the Senate Banking Committee, has also expressed skepticism of crypto and stablecoin firms, generally, and their efforts to further wade into the traditional financial system by seeking trust bank charters, specifically.
In a letter earlier this month to Comptroller Gould, Warren describes the OCC’s conditional approvals as apparent violations of the National Bank Act. Warren argues that the entities seeking charters, including Coinbase, “look like crypto banks, not trust companies.”
Per Warren’s letter (spacing adjusted and emphasis added):
National trust companies do not face the same restrictions, oversight, and obligations as full-service national banks, and therefore are not permitted to engage in the broader set of activities that constitute the business of banking, like issuing deposits and making loans.
Nonetheless, since December 2025, you have approved at least nine national trust charters for crypto companies that intend to engage in activities that appear to go far beyond the narrow set of activities permitted by law. These companies are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank.
Your decision to facilitate this regulatory arbitrage not only conflicts with federal law, it also poses serious risks to consumers, the safety and soundness of the banking system, and the separation of banking and commerce.
Warren points to Coinbase’s charter application, which specifies that it intends to “enable Custody clients to access staking, financing, and trading services,” and will “explore the launch of other digital asset products, including payments products.”
“Staking” in crypto is functionally somewhat similar to bank deposit products, and Coinbase and others have explicitly discussed using national trust banks as part of a broader product strategy that includes payments and credit.
In her letter, Warren asks the OCC to produce a number of documents:
The full national trust bank applications, including confidential (non-public) exhibits of Ripple National Trust Bank; Paxos Trust Company, LLC; First National Digital Currency Bank; Fidelity Digital Asset Services; BitGo Trust Company; Foris DAX National Trust Bank; National Digital Trust Company; Bridge National Trust Bank; and Coinbase National Trust Company.
A list of activities each trust banks plan to engage in, the OCC’s analysis of which of those it deems activities of a trust company or “related” to activities of a trust company, and supporting legal analysis.
The OCC’s opinion if, under Interpretive Letter 1176, a national trust bank could engage in an activity otherwise unlawful under the National Bank Act as long as a state nominally labeled the activity as “fiduciary” in nature.
If the OCC’s final rule related to chartering national trust companies would allow such companies to engage in non-fiduciary activities reserved by law for full-service national banks without the corresponding oversight and legal obligations.
The OCC’s understanding of if GENIUS Act amended 12 U.S.C. 27(a), 92a, or any other section of the National Bank Act governing national trust companies.
And copies of any communication between OCC officials and President Trump, immediate members of Trump’s family, employees or others operating on behalf of Trump or his immediate family members, or any White House employees related to the trust charter applications associated with the companies mentioned above.
Various stakeholders in the crypto and stablecoin ecosystem were quick to push back on Warren’s arguments.
The Digital Chamber, which describes itself as the world’s largest digital asset and blockchain trade association with more than 250 members, sent a letter to Comptroller Gould last week regarding national trust bank charters.
The trade group’s letter argues:
The record does not support the suggestion that these approvals were made carelessly or unlawfully. Each of the companies named in Senator Warren’s letter underwent a rigorous OCC review process, met all applicable statutory and regulatory requirements, and were granted charters or conditional approval for charters only upon demonstrating that their proposed activities fall within permissible activities for national trust banks. The process included extensive scrutiny of consumer protection frameworks, compliance programs, information security systems and architecture, and risk management infrastructure, which are obligations these banking associations are now bound to maintain under ongoing OCC supervision.
The Digital Chamber further argues that Warren’s suggestion that approvals of these trust bank charters is an apparent violation of the National Bank Act “misreads both the statute and the OCC’s longstanding charter authority.”
At this point, the horse has already left the barn, so to speak, and it is a near certainty that the OCC under Comptroller Gould will not revoke or suspend conditional national trust bank charters granted to Coinbase or any other applicant.
Still, questions — and, presumably, battles — remain ahead: what activities will these new trust banks try to and be permitted to engage in? Will they be granted access to Fed master accounts?
With the CLARITY Act not yet finalized, banking industry opposition feels like it is reaching a crescendo. And, true to the idiom that “politics makes strange bedfellows,” Senator Warren, long a thorn in the side of bankers, and bank lobbyists like ICBA and BPI, are more or less on the same side of this issue, pushing back on the crypto and stablecoin industry’s growing inroads into the traditional financial system.
How, exactly, these forces play out in the short-, medium-, and long-term remains to be seen and seem likely to be highly dependent on the outcome of the midterm elections — and who controls the White House in 2029.
Q1 Quarterly Banking Profile: Seven Quick Takeaways
The FDIC released its Quarterly Banking Profile for the first quarter last Wednesday. The report is a data rich snapshot of the overall health of the U.S. banking system.
Aggregate earnings increased by $2.8 billion quarter over quarter, hitting $80.5 billion, for a 1.26% return on assets. ROA increased by 2 basis points quarter over quarter.
The improvement in net income was driven by increases in noninterest income, realized gains on securities, and a decrease in applicable income taxes, which were partially offset by higher noninterest expenses, higher provisions, and lower net interest income.
Net interest margin, or the difference between interest generated from loans and assets vs. cost of funds decreased, by 8 basis points quarter over quarter to 3.31%.
Credit loss provisions rose slightly, to $21.4 billion, but were still 4.6% lower compared to Q1 2025.
Credit performance is still holding, with overall rates of past-due/non-accrual and net charge-off rates down slightly vs. last quarter. Past-due/non-accrual rate came in at 1.53% in the first quarter, with a net charge-off rate of 0.59%.
Unrealized losses on invest securities ticked up by $19 billion, or 6.2%, to $325.1 billion, owing to the rise in the 30-year mortgage rate in March, which decreased the value of banks’ existing portfolios of mortgage-backed securities.
Finally, banks reported an increase in domestic deposits of $389.7 billion, or 2.1%, as well as an increase in non-deposit funding liabilities, primarily composed of repurcahse agreements and trading liabilities, of $393.3 billion.
Paid Subscriber Exclusive: CFPB & Treasury Undermine CDFI Program, Tennessee Gov. Signs Remittance Tax, Coinbase Re-Launches Direct Deposits
Having failed at earlier efforts to gut the Treasury Department’s Community Development Financial Institution program, which has broad bipartisan support, the Trump administration is trying several new approaches.
Last month, Treasury announced it was opening an investigation into allegedly “predatory” practices by CDFIs, and now, Bloomberg Law’s Evan Weinberger reports, the CFPB has sent out at least four “supervisory questionnaires” to loan funds that are part of the CDFI program.